Fareed Zakaria Explains Why India Matters

In the wake of Indian prime minister Manmohan Singh’s state visit to the United States this November we opined last week that India matters. President Obama recognized that when he declared the country “indispensable” in the building of “a future of security and prosperity for all nations.” Nevertheless, in India, there is doubt about Washington’s sincerity.

Obama Administration officials publicly questioned the nuclear deal that was struck with India under George W. Bush — a deal that India considered the greatest recognition of its great power status in years. There is also worry that the United States is leaning too much on China and Pakistan in its attempt to successfully end the war in Afghanistan. And India dreads the prospect of American protectionism.

Writing for Newsweek, Fareed Zakaria neatly outlined once again why India is of much greater importance to American interests in the region than China, let alone Pakistan.

India matters in Afghanistan. Its economic potential is literally a hundred times greater. As the Taliban were forced out of power, “the cuisine, movies, and money that flowed into the country were, naturally, Indian.” With $1,2 billion in aid, India is the world’s fifth contributor to the reconstruction of Afghanistan, investing much more than China is. After all, it stands much to lose should the United States and NATO abandon the country. Pakistan might succumb to total chaos with terrorism dripping over the border into India.

American policymakers do not seem to grasp in full that India’s objectives in Afghanistan, unlike Pakistan’s, are perfectly aligned with their own — “to defeat the Taliban and to support the elected Afghan government.” Islamabad, on the other hand, “has long argued that it has a right to see a pro-Pakistani government in Afghanistan,” lest “India reign” in the word of one Pakistani general.

Zakaria concludes with the following wise words on why the United States should pursue the alliance with India above anything else:

Obama must keep in mind that South Asia is a tar pit filled with failed and dysfunctional states, save for one long-established democracy of 1.2 billion people that is the second-fastest-growing major economy in the world, a check on China’s rising ambitions, and a natural ally of the United States. The prize is the relationship with India. The booby prize is governing Afghanistan.

The Potential of European Might

War, said Clausewitz is nothing but a continuation of political intercourse, with the mixture of other means. If your politics or those of some other propel you to military action, then that is what must be done.

The recent appointment (not election) of a European president unifies the European Union, politically more than has been seen before, with the addition of a “High Representative of the Union for Foreign Affairs and Security Policy” providing the bloc with a mouthpiece on strategic affairs which one presumes will include out of area operations of a military nature and a unified approach to the strategic defense of the EU as a whole. Read more “The Potential of European Might”

The New Atlantic Order

The financial collapse of 2008 and the subsequent global economic downturn have left American prestige badly damaged. For years its free-trade rhetoric dominated debate within fora like the World Trade Organization and urged second-rate powers to privatize and reduce tariffs. Whatever its political course, American economic leadership seemed unchallenged. It was the era of the Washington Consensus.

Today, the American economy lies in shambles and eight years of George W. Bush have obliterated a great amount of the international leverage and respect that the country could previously count on. American management of globalization is contested as is American predominance on the world stage. Rising powers as Brazil, China and India and old world players as Europe and Russia all demand a place in the Obama Administration’s “multilateral” game.

Serious attempts are made in that direction. The G20 is a fine example of what Henry Kissinger called for last January in “The chance for a new world order“: “creating an international political regulatory system with the same reach as that of the economic world.” A promise that the United Nations has never been able to fulfill, the G20 now revives by shaping the political and financial framework of the future. Read more “The New Atlantic Order”

Disappointing Sarkonomics

French president Nicholas Sarkozy is quite possibly the greatest of European leaders today. He has regained for his country a preeminent position within the European Union and took little time to repair the transatlantic discord that so disturbed French foreign policy since the start of the Iraq War in 2003. On the economic front however, his achievements are less impressive.

Although foreman of France’s right-wing, Sarkozy has displayed little love for free-market economics since the recession struck almost two years ago. Indeed, he blames the “freewheeling Anglo-Saxon” model for today’s trouble and hopes to demonstrate “the victory of the European model” — which, probably, means the victory of the French model in his view.

France has comfortably overcome the townturn thanks to that model: the country has a huge public sector that currently employs about one in every five workers. Besides, Sarkozy has shown himself willing to protect the French private sector also, demanding, for instance, that automaker Renault create jobs at home in exchange for stimulus funding. The relative lack of unemployment comes at a cost though: the public debt has naturally skyrocketed while Paris maintains an 8.5 percent deficit on the budget. That in spite of demands from Brussels that it be cut to 3 percent in accordance with European regulation.

Sarkozy then turns out to be something of an old-fashioned Frenchmen after all. That is not to say that he isn’t refreshing at all. Abroad, the president has persued an intelligent and most successful foreign policy while at home, he has fulfilled many of his campaign promises, although not always with the most stunning of results. His large-scale effort to cut on public expenditure for example has been practically brought to a standstill since the first signs of economic anxiety became apparent.

In Newsweek Tracy McNicoll concludes that Sarkozy really has no economic principles. “Sarkozy has the flexibility to win battles but not the single-minded vision to define or win a war, as Ronald Reagan or Margaret Thatcher did.” Perhaps. Then again, flexibility alone seems a lot to be grateful for these days.

China Can Help in Pakistan

Finally, the United States seems to have found a role for China to play in resolving the war in Afghanistan. As Washington now openly admits, stability in Pakistan is as crucial to winning the fight against extremism across the border as the war effort itself. Throughout the past several years, American military aid has been flowing into Pakistan with, it seems, limited result. Government buildings and local army headquarters are targets of attack every so many weeks still. Unmanned bombing against suspected Taliban hideouts has only helped to aggravate resentment against the American involvement in Pakistan; an involvement that the Pakistani government, also, has begun to question.

The Pakistanis are understandably cautious. They feel that the Americans once left the region to its own devices — which in fact brought about the whole problem of the Taliban — and won’t hesitate to do so again. That fear is not entirely without foundation. Should the surge fail to do for Afghanistan what it did for Iraq, it is not unthinkable that NATO, perhaps including the United States, will abandon the war. Moreover, Pakistan is suspicious of Washington’s increasingly close ties with India: a good thing for Washington but not so good for Islamabad that just recently accused India once again of sponsoring terrorism against it. Read more “China Can Help in Pakistan”

Participation — Why Bother?

Participate? Why? You’ve got enough people in your movement that I shouldn’t have to participate. I don’t need to join your group, you guys will do the work for m–

A free glossy magazine? Group potlucks? A tote bag with a logo on it? Why didn’t you say so?! I’m in!

The above is just one illustration of how leaders of informal political processes mobilize people; by offering selective benefits (as Mancur Olsen and many others suggest), a group can gain members, money, and thus power. Because public goods are, by definition, public and usable by all, they have the opportunity to fall victim to the tragedy of the commons–overuse by selfish (or perhaps rational-thinking?) individuals.

Indeed, Olsen and many others wonder why Joe the UPS Delivery Man Who Never Comes On Time and Jane the Part-Time Working Mother Who Is Completing Her Master’s Degree At Night School bother to participate in informal processes at all — why fight for something that other people can fight for for you? Read more “Participation — Why Bother?”

Five Hundred Is Not Enough?

As we’ve been recently been informed by the various media, Gordon Brown, the prime minister, has pledged five hundred new (presumably) combat-role servicemen to Operation Herrick — the British mission in Afghanistan. Five hundred would boost the British presence to a total of 9,500 service personnel from all the services including the Royal Air Force and the large Royal Navy training body. Within your humble correspondent’s lifetime, Britain deployed whole divisions to operational theatres such as Northern Ireland, where three brigades numbering several thousand kept the police in support of the Royal Ulster Constabulary. A task force of 9,500 does little to compare to the 68,000 American service personnel in “Afghan.”

American defense spending is a staggering 41 percent of the global total. Its armed forces population is so large that the United States Marine Corps is bigger than the entire British Army and due to its all-arms nature, considerably more effective. At a time when American military expenditure dwarfs the whole of the British economy, it is hardly surprising that there is some difference in capability here.

Therefore it is curious that the British media remain shocked that British forces get little mention in American strategic and military dialogue about the region. What is more surprising is that American commentators and possibly even politicos expect a greater contribution from the British Armed Forces.

The briefest of glances at the history of the services from 1945 onward will provide anyone with the knowledge that defense cuts by both parties across all successive governments have neutered the operational capabilities of state. The possibility of fighting the Falklands War in 1982 was small enough, now it would be next to impossible. With the end of the Cold War and the subduing of the Troubles in the Province, further cuts and reductions seem not only economic but dare I say it sensible, certainly in the Army. That this hasn’t been taken on board by our erstwhile journalists is probably due to the myth of the special relationship, on which I have spoken on in the (scarcely) public domain before.

What is certain is that until required reforms in the British Armed Forces are implemented, five hundred troops is about as much as can be deployed with political constraints, and without them there wouldn’t be that much more.

A New START

Pressing the “restart” button — that is how the Obama Administration, literally, initiated its policy toward Russia after the cool Bush and Putin years. Now, in an interview with Fox News, National Security Advisor Jim Jones suggests that the president might win another foreign policy success on one of the very issues dear to him: nuclear proliferation.

“All of the dialogue is encouraging, they’re positive,” said Jones about the negotiations that are going on in Geneva, Switzerland these days. Russia and the United States are attempting to draft an arms control deal to replace the existing START agreement that expires new Saturday. “We’re down to the last few paragraphs and sentences.”

That is good news for Obama who hopes to have a new treaty signed by the time he heads for Oslo, Norway next week to pick up his Nobel Peace Prize. The reduction of nuclear weapons is said to be the subject of his acceptance speech.

The current START and SORT treaties limit both the number of nuclear and conventional weapons that Russia and the United States may possess. Still each maintains nuclear arsenals of thousands of warheads. The United States is estimated to have about 10,000 warheads of which 2,623 are operational. The Russian number more ambiguous: it said to have 4237 warheads operational in 2007 but this might be an exaggeration. There is no doubt however that the country has between 8- and 10,000 of such weapons in storage. (For comparison, the world’s third nuclear state, France, maintains about 300 warheads operational.)

The Geneva negotiations focus only on the operational warheads but its goal is more ambitious than any agreement signed between the former Cold War adversaries so far: both intend to cut their arsenals of operational warheads to between 1,500 and 1,675 within the next seven years. Should such an agreement come about, President Obama can boast an enormous step forward in the fight against proliferation.

Sarkozy Strikes at the City

With France, along with Germany, leading the way of European recovery, President Nicolas Sarkozy has both the power and the prestige to launch a reinvigorated campaign against what he calls the “freewheeling Anglo-Saxon” model of finance. With his countryman Jean-Claude Trichet heading the European Central Bank and UMP-ally Michel Barnier soon to be installed as the union’s internal market commissioner, Sarkozy appears to have everything in place to make the world see “the victory of the European model, which has nothing to do with the excesses of financial capitalism.” No wonder that people are worried in the City of London.

London was quick to respond. Mayor Boris Johnson traveled to Brussels to lecture the European Parliament but his entourage of rabble-rousers and cameramen did little to persuade them. Nor was Chancellor of the Exchequer Alistair Darling’s argument that “London is New York’s only rival as a truly global financial center,” and therefore Europe should strengthen, not weaken it, well received.

Earlier, in conference with his colleagues from across the continent, Darling compromised on the creation of a European financial regulator. French finance minister Christine Lagarde praised the deal which according to Darling leaves considerable responsibility with national authorities. That is not how his counterparts sold the agreement at home.

Nevertheless, there is some truth in Darling’s statement. A European Systemic Risk Board is to be put in place to spot irregularities in the financial system that threaten to harm it. But it will have no power to leap upon banks to put any questionable practices to a halt. Rather it is supposed to issue recommendations and warnings alone.

Sarkozy has more weapons in store to bombard Paris to the world’s next financial capital however. A European Alternative Investment Directive seeks to install a framework for all alternative fund managers which in London is rather perceived as an attempt to shackle another sector of “freewheeling Anglo-Saxon” capitalism. If that were true, Paris in fact stands to gain very little: hedge funds taking a pre-emptive decision to leave London headed straight for Switzerland, not Paris or Frankfurt.

There is more reason for Londoners to be hopeful. As Ambrose Evans-Pritchard notes in the Telegraph, Barnier is actually “deeply averse to trampling on British sensitivities.” Moreover, his director-general, Jonathan Faull, is British. “Given the circumstances, the Barnier-Faull team is the best that Britain could hope for.” Whether that will stop Sarkozy remains to be seen.

Spanish Socialism is Hampering Europe

Most of the economies of the European Union are slowly moving out of recession. Both Germany and France are boasting modest growth rates and they are pulling other countries, like Italy, on the road to recovery. There is one country that seems utterly incapable of keeping pace however and that is Spain.

Government stimuli have been of some help but the Spanish national bank warns that early signs of recovery are misleading: because imports have fallen even more dramatically than exports have, BNP-figures might appear optimistic but in truth, the country lacks a solid foundation for economic growth.

During the ten years between 1997 and 2007 the Spanish economy was almost exclusively driven by a rapidly expanding real estate market, producing a stable growth rate of 4 percent annually. In the same period the country attracted almost four million immigrants. Now that construction has come to a standstill many of these people are moving away while millions of Spaniards are left unemployed with so much as two million living off unemployment benefits.

Spain’s prime minister Rodríguez Zapatero came to power in 2004 promising to diversify the country’s economy. He intended to invest in renewable energies, bioengineering, high-speed infrastructure, construction and logistics to encourage innovation and the emergence of a solid services economy. Now, five years later, the prime minister continues to repeat his promise will little progress made in the meantime.

“My government’s ambition is to make this an innovative, creative, entrepreneurial country while upholding the social welfare state,” said Zapatero last July. He foresaw no trouble combining the two at the time. “Some people will say that a social welfare state and a competitive economy are incompatible, that innovation is incompatible with workers’ rights. They want to deregulate workers rights, deregulate social rights. That is exactly the same tune as people who say we have to deregulate the financial markets and I do not dance to that tune.”

As a result, Spain faces both an enormous trade deficit and a deficit on the state’s budget of almost 10 percent with the public debt, of course, mounting fast. Zapatero nevertheless counts on foreign investments to carry his country out of recession although no one in their right mind would entertain the notion of investing in Spain nowadays.

It’s not just money from abroad that is lacking however. Spanish banks are hesitant to borrow which is hurting small businesses and the whole of the real estate market because people can’t a mortgage.

Today, finally, the Spanish government announced long awaited labor market reform after unemployment reached a staggering 19.3 percent in October this year. Zapatero proposes to provide for greater flexibility, reducing high dismissal costs but also reducing working hours to preserve employment: a controversial step that seems unwise considering how little it did to once ail Britain’s economy during the 1970s.

Spain’s lack of recovery left the European Central Bank with a difficult choice to make. As the French economy grows once more it is expected to see inflation go up above the European average next year. France has proposed to temper it by increasing the interest rate (a step Australia and Norway have already taken) although this would hurt the Spanish economy terribly by further depriving it of credit. The Bank had to chose between serving France, whose recovery is helping other European economies also, and supporting wearisome Spain because its own government lacks the political will to do so. For the time being, it elects do to the latter, maintaining the interest rate at 1 percent.